Bridging before property sale

The scenario

The borrower has agreed to buy a new property with a settlement date inside the next few weeks. The existing property they intended to sell first is either still on market or under contract with a later settlement date. The borrower needs the new settlement to land before the existing one settles; the gap between the two events is the bridge.

Why the bank cannot solve it

Bank bridging exists but is typically slow and structurally tied to the bank's standard lending policy. On any urgency, the bank's assessment cycle does not match the contract timeline. Bank bridging files also tend to attach to the new acquisition; private bridging can be structured against the existing asset, which is often cleaner.

How a private lender approaches the file

The credit team underwrites the sale exit first, contract price, agent track record, marketing campaign, realistic settlement timeline. The bridge size is set to clear cleanly at sale settlement net of selling costs. Security is the existing property (cleanest) or the new acquisition, depending on the structure.

Indicative file structure

• Security: registered first mortgage over the existing property, or over the new acquisition.
• Term: sized to the documented sale timeline plus contingency.
• Interest: capitalised through the bridge.
• Exit: sale settlement of the existing property clears the facility in full.

What credit will ask for

• Contract of sale for the new acquisition with the settlement date.
• Contract of sale for the existing property (or marketing evidence if not yet contracted).
• Standard identification and supporting financials.
• Title and recent valuation on both properties if available.

Key risks

Exit slippage on the existing sale is the dominant risk. The credit team builds contingency into the term and underwrites the sale timing realistically. Where the sale is not yet contracted, the buffer is larger. Property- secured lending carries the risk of loss of the security on default.

Frequently asked

• What is bridging before sale?
  A short-dated facility that lets a borrower settle a new property purchase before the existing property is sold and settled. The bridge clears once the existing sale completes; the borrower ends with a single facility on the new asset.
• Does the existing property need to be under contract first?
  Preferred but not always required. A contracted sale with an unconditional date is the cleanest exit. Where the existing property is not yet under contract, the lender will want to see marketing in train, agent appointments, and a realistic timeline.
• What if the sale takes longer than expected?
  Bridging files are sized with contingency. The credit team builds buffer into the term and stress-tests for sale slippage. Where the sale takes materially longer than planned, the borrower will usually engage with the lender on extension or restructure.
• Is interest paid monthly during the bridge?
  Most bridging files capitalise interest, the lender adds accrued interest to the loan balance each month and the borrower pays everything at exit when the sale settles. This means no monthly cashflow burden during the bridge.
• How is the bridge sized?
  To the documented sale exit (the contract price net of selling costs), not to the value of the new acquisition. The credit team underwrites the timing and certainty of the sale; the bridge size follows from that.